Your first Leave and Earnings Statement (LES) looks nothing like a civilian pay stub: a dozen lines, some taxed and some not, and no single number that says what you earn. Once you know what each line does, the stack adds up to a package that is bigger than it looks — and it holds a retirement account with the lowest fees in personal finance.
Your LES: pay arrives in pieces
Base pay is not your pay. Base pay is one line, set by your rank and years of service (the current pay table is on militarypay.defense.gov). Allowances and special pays stack on top of it, and the allowances are excluded from gross income under IRS Publication 3 — federal income tax never touches them.
| Line on your LES | What it is | Federal income tax? |
|---|---|---|
| Base pay | Salary set by rank and years of service | Yes |
| BAH (Basic Allowance for Housing) | Housing money, set by your duty station, rank and dependents; not paid while you live in government quarters | No — excluded from gross income |
| BAS (Basic Allowance for Subsistence) | A flat monthly food allowance | No — excluded from gross income |
| Special and incentive pays | Hazardous duty, flight, sea, language, reenlistment bonuses | Yes, unless earned in a combat zone |
| Combat zone pay | Pay earned in a designated combat zone | No for enlisted members and warrant officers; capped at $10,983 a month for officers in 2025 |
Because BAH and BAS arrive untaxed, a dollar of allowance is worth more than a dollar of salary, and Social Security and Medicare tax — FICA, 7.65% — come out of base pay only. Compare base pay alone with a civilian offer and you will feel underpaid; the transition lesson shows why the reverse mistake costs more.
myPay (mypay.dfas.mil) holds your LES, your withholding and your TSP contribution rate. Read one LES end to end every few months: a wrong BAH rate after a PCS or a missing special pay shows up there first, and your unit's finance office is where the fix starts.
The TSP: a 401(k) with the lowest fees you will see
The Thrift Savings Plan is the retirement plan for service members and federal employees, and it is a 401(k) in everything but name. You choose a percentage of base pay (and, if you want, of special pays and bonuses), it comes out before you see it, and it grows untouched until retirement. The employee limit is the same as a 401(k): $23,500 for 2025. Its funds are index funds with expense ratios a fraction of what most civilian plans charge.
Like a 401(k), the TSP has two tax flavors. Traditional contributions skip tax now and are taxed when withdrawn; Roth contributions are taxed now and come out tax-free. The Roth vs traditional lesson covers the choice; when most of your pay is tax-free allowances, your taxable income and your bracket are low, which is the situation the Roth side is built for.
| TSP fact | What it means for you |
|---|---|
| Very low expense ratios | Less of your balance is skimmed each year, so more of it compounds |
| Traditional vs Roth | Pay tax later (traditional) or now (Roth) — the same account either way |
| Lifecycle (L) funds | One fund that shifts from stocks toward bonds as your target date nears |
The BRS match: money the government adds
If you joined in recent years you are under the Blended Retirement System (BRS); if you joined earlier and did not opt in, you are under the legacy pension system, and your LES shows which. Under BRS the government puts an automatic contribution into your TSP whether or not you contribute a cent, then matches part of what you contribute up to a cap. The automatic and matching percentages, the years of service they cover, and the vesting rule for the automatic part are on tsp.gov and militarypay.defense.gov — check the current page rather than a figure a friend remembers.
The rule is the one that applies to any employer match: contribute at least the percentage that captures the full match, because every unmatched dollar is money the government offered and you declined. Set that percentage in myPay the week you arrive at your first duty station. BRS also pays continuation pay, a mid-career bonus with a service obligation attached; the details are on the same DoD page.
Count the tax-free pieces at full value, and send enough of the taxable one into the TSP to collect everything the government offers — the compound-growth lesson shows why the early years matter most.